Image Credit: GAP
Gap CEO Art Peck will step down after nearly five years at the helm as the retailer struggles to combat declining sales.
Peck, who started working at Gap in 2005 and has served as CEO since early 2015, will leave after a brief transition, the company said on Thursday. He will also step down from the board. Bob Fisher, who is one of the three sons of Gap’s founders Donald and Doris Fisher, will take over on an interim basis. He currently serves as nonexecutive chairman of the board. Forbes estimates Fisher’s net worth at $1.3 billion.
Gap said it is still looking for a successor who possesses “operational excellence” and can help “drive greater efficiency, speed and profitability.” It credited Peck for helping to build its digital capabilities.
The retailer, which owns Gap, Old Navy and Banana Republic, has struggled for years to excite and attract shoppers. It reported another quarter of sales declines and cut its full-year outlook on Thursday. Same-store sales fell 4% in the third quarter, driven by the a 7% decline at its namesake brand, a 4% drop at Old Navy and a 3% slide at Banana Republic.
The company also dropped its full-year earnings projection to between $1.38 and $1.47 per share. That is down sharply from the $1.88 to $2.08 that it had previously projected and is also a far cry from the $2.07 that Wall Street analysts were calling for.
The stock fell 7% in after-hours trading. It has shed 40% of its value in the last 12 months and plummeted 60% since Peck took the reigns.
The management shuffle comes at a time when the retailer is in the middle of splitting itself into two publicly traded companies. Old Navy will be spun off as a stand-alone company, and Gap, Banana Republic and several smaller brands will compose the other company.
Gap, which has over 3,500 stores around the world, has faced stiff competition from discount retailers like TJMaxx and fast-fashion companies like Zara and H&M. To entice shoppers, it has turned to offering frequent discounts on its merchandise, which has eaten into its profit margins.
Gap was started in 1969 by Doris Fisher and her husband Don (d. 2009) after the couple struggled to find jeans that fit him. They raised $63,000 to open their first store, which sold jeans and music, in San Francisco.